Auto Loan Delinquencies Creep Higher for the Creditworthy

Credit delinquencies are starting to creep up even among borrowers with the highest credit scores. Research shows that most of the increase is concentrated in the auto loan and mortgage segments, while credit card delinquencies remain stable for now.

According to the latest edition of CreditGauge, published by VantageScore, late-stage delinquencies have risen across all credit tiers. The sharpest rise was in the Superprime segment (credit scores 781-850), where delinquencies jumped 109% year-over-year. The next tier, Prime (661 to 780), recorded a 47% increase.

Much of the rise stems from mortgages and auto loans, where delinquency rates climbed by 0.11 and 0.05 percentage points, respectively.

Both auto loan and mortgage balances also grew on a month-over-month basis.

Big Shakeups in Car Loans

The auto finance business has been under pressure. Auto loan originations are falling, according to VantageScore, even as the amounts financed per purchase continue to grow. Experian reports that the average monthly payment for a new car in Q1  2025 was $745. The average credit score for those buyers was 756, putting them squarely in the Prime segment.

Buyers have been trying to lower those payments by opting for longer auto loans. Six-year loans are now the most common term, accounting for 36.1% of loans in Q2, according to Edmunds.com. Seven-year loans represented 21.6% of all financing for new vehicles.

Credit Cards Remain Unscathed

The credit card market hasn’t shown signs of weakness yet.

The Federal Reserve reports that overall delinquency held steady at 3.05% between Q1 and Q2 2025. That’s slightly lower than in Q4 2024, when the rate stood at 3.08%.

Weaknesses in other types of loans borrowed by creditworthy individuals may not necessarily spill over into the credit card market.

“With the recent drop in chargeoffs for all credit card issuers falling from 4.42% in Q1 2025 to 4.17% in Q2 2025, we view the VantageScore comment as anecdotal for credit cards, and expect to see strong delinquency trends for the next 60 days,” said Brian Riley, Director of Credit at Javelin Strategy & Research. “The segment VantageScore refers to—those with better credit scores—should not be ignored, though. This segment is often a canary-in-a-coal mine. But for now, credit card performance continues to be strong.”